ISLAMABAD: The United States has formally decided to finance the feasibility study of $14 billion Diamer-Bhasha Dam — Pakistan’s top priority project —and to plead Islamabad’s case for a $7.3 billion bailout package from the International Monetary Fund (IMF).
Richard Olson, the US ambassador to Pakistan, told Finance Minister Ishaq Dar at a meeting here on Wednesday that US Congress had authorised financing the feasibility study of Diamer-Bhasha Dam of international standards through its agency for international development – USAID, according to a senior government official.
The official said the pre-feasibility study of the project had been completed a couple of years back but the US administration wanted the feasibility study of international standards and parameters to meet requirements of the Congress before appropriation of funds for construction of the dam project.
Therefore, an unspecified funding would be made available by the US administration through the USAID to complete the feasibility study. He said the US would support construction of the project so that donors and international financial institutions could feel comfortable in extending loans, investments and technical support to the project.
“Pakistan welcomes the interest shown by the US Congress for its support in carrying out feasibility studies for Pakistan’s flagship storage project Diamer Bhasha Dam,” Mr Dar was quoted as welcoming the US support and said the government had no objection over preparation of feasibility study of international standards to meet requirements of US laws.
The official said Mr Dar sought support of the US administration in increasing the IMF bailout package to $7.3 billion.
Mr Olson said the US supported the IMF programme which was an “extremely good thing” to restore confidence of the lending and investor community.
He said the US administration would put its weight behind Pakistan’s case for higher loan package.
Mr Dar told the ambassador that the IMF management had agreed to increase bailout package to $6.5bn from $5.3bn offered by its staff mission early this month but Pakistan was insisting on increasing it to $7.3 billion to bridge the gap between external inflows and outflows.
Mr Dar said all progress on details of the programme have been positive so far and “the only pending issue that needs to be resolved was the size and tranches of the loan.”
“Even with $7.3 billion loan, Pakistan will be facing a financing gap of about $0.5 billion,” the finance minister told Mr Olson, elaborating that in case of $6.5bn offered by the IMF, the gap would go beyond $1bn and hence US support in the IMF board would be of crucial importance.
An official statement said the issue of Bilateral Investment Treaty (BIT) between the two countries also came under discussion during the meeting.
The US has been pushing early signing of the agreement to facilitate US investment in Pakistan but some strong protectionist rights to US investors were being opposed in relevant government quarters because the US demand involves dispute resolution directly through international arbitration without first completing Pakistan’s judicial process.
The finance minister, however, informed the ambassador that he had been pre-occupied with budget and circular debt issues and would now plan to obtain input from all stakeholders in the government to take the process forward.
The forthcoming visit of Secretary of State John Kerry also came up for discussion.
The US Ambassador informed the Finance Minister that the US Secretary of State was looking forward to have a meeting with the finance minister and discuss current bilateral economic issues.
The finance minister said Pakistan was looking forward to his visit and expressed the hope that meetings with the US Secretary of State would be productive and mutually beneficial.